Kodak Consulting With Creditors About Retaining Patents

Eastman Kodak Co. (EKDKQ), which put
patents up for sale at a bankruptcy auction, is consulting with
creditors about retaining the patents and forming a licensing
company.

Kodak has been engaged in “extensive ongoing
negotiations” for a potential sale and licensing transaction,
the company said in a filing today in U.S. Bankruptcy Court in
Manhattan.

“The debtors are continuing to explore other alternatives
with respect to the digital imaging patent assets, and their
intellectual property more broadly, and may not reach acceptable
terms with parties via the auction process,” Kodak said.

Kodak, based in Rochester, New York, put more than 1,000
patents on the auction block to finance a turnaround after
filing for bankruptcy in January. The patents may be worth
$2.2 billion to $2.6 billion based on an estimate by 284
Partners LLC, the company said in court papers.

A newly formed licensing company would be a “source of
recovery” for creditors, Kodak said in its court filing.

Kodak can make more money by forming a licensing company to
enforce the patents instead of selling them at an auction, said
Alexander Poltorak, chief executive of General Patent Corp.,
which represents clients in patent licensing and enforcement
matters. Kodak’s valuation of more than $2 billion for the
portfolio was too high, according to Poltorak. The patents may
be worth about 10 percent of that amount, he said.

‘Colossal Fiasco’

“The sale was a colossal fiasco,” Poltorak said. “They
should have been realistic about what value to expect.”

The auction was scheduled to begin Aug. 8 after U.S.
Bankruptcy Judge Allan Gropper in Manhattan, who is overseeing
Kodak’s bankruptcy, said the auction could proceed. A court
hearing to approve the sale has been postponed several times.
Kodak said it was adjourning the sale hearing “until further
notice.”

“The company reiterates that it has not reached a
determination or agreement to sell the digital imaging patent
portfolio and may, in consultation with its creditors, decide to
retain and license these assets as a source of recovery for
creditors,” Stefanie Goodsell, a Kodak spokeswoman, said in a
statement.

The case is In re Eastman Kodak Co., 12-10202, U.S.
Bankruptcy Court, Southern District of New York (Manhattan).